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U.S. Home Flipping Increases To Eight-Year High In 2019 While Returns Drop To Eight-Year LowIRVINE, Calif., March 5, 2020 /PRNewswire/ -- ATTOM Data Solutions, curator of the nation's premier property database and first property data provider of Data-as-a-Service (DaaS), today released its year-end 2019 U.S. Home Flipping Report, which shows that 245,864 single family homes and condos in the United States were flipped in 2019, up 2 percent from 2018 to the highest point since 2006. The number of homes flipped in 2019 represented 6.2 percent of all home sales in the nation during the year, an 8-year high. That was up from 5.8 percent of all home sales in 2018 and from 5.7 percent in 2017. While flipping activity rose, profit margins continued dropping. Homes flipped in 2019 typically generated a gross profit of $62,900 nationwide (the difference between the median sales price and the median paid by investors), down 3.2 percent from $65,000 in 2018 year and 6 percent from the post-recession peak of $66,899 in 2017. Historical U.S. Flipping Gross Profits & Returns Chart "Home-flipping profits across the U.S. dropped again in 2019 as the business of buying and selling houses absorbed its worst year since the housing market was mired in the fallout from the Great Recession. This happened as the cost of buying properties continued to rise faster than gains on resale," said Todd Teta, chief product officer at ATTOM Data Solutions. "That's not to say that the home-flipping industry is tanking or losing its allure for investors because home flipping rates are higher than they've been in eight years. But profits did continue to decline again for investors." The typical gross flipping profit of $62,900 translated into a 40.6 percent return on investment compared to the original acquisition price. That was down from a 45.8 percent gross flipping ROI in 2018 and down from 51.4 percent ROI in 2017. The latest typical return on home flips stood at the lowest point since 2011. "While the gross profit figures do not include the cost of rehabbing the properties, which will serve to reduce profitability, the measure itself is something that Roc Capital focuses on heavily in its underwriting process. Roc delinquency figures have remained static year over year, however we do see a broad increase in nationwide lis pendens filings by lenders in the fix and flip space that exceeds the volume growth evident in this report," said Maksim Stavinsky, co-founder and COO of Roc Capital. "For 2019, the YoY increase in lis pendens filings in this space was greater than 50 percent, with most of that increase occurring in the second half of the year, and the first two months of 2020 shows a further 30 percent or greater increase in lis pendens filings over 2019. While actual losses from delinquencies have been low across the space, historically rising delinquencies have been a precursor to losses, so prudent underwriting is more important than ever in this environment." Home flipping rates up in 64 percent of local markets Aside from Raleigh, NC, and Charlotte, NC, the biggest annual flipping-rate increases in MSAs with a population of 1 million or more were in Atlanta, GA (up 39.1 percent); San Antonio, TX (up 37.2 percent) and Tucson, AZ (up 34.2 percent). The biggest decrease in annual flipping rates among MSAs with a population of 1 million or more were in Seattle, WA (down 16.9 percent); Indianapolis, IN (down 9.1 percent); Grand Rapids, MI (down 8.0 percent); Rochester, NY (down 5.9 percent) and Baltimore, MD (down 4.8 percent). Home flips purchased with financing dip while those bought with cash climb Historical U.S. Home Flipping Acquisition Trends Chart Among metropolitan statistical areas with a population of 1 million or more and sufficient data to analyze, those with the highest percentage of flips purchased with financing in 2019 included Virginia Beach, VA (67.6 percent); Seattle, WA (55.9 percent); San Diego, CA (53.7 percent); Boston, MA (53.6 percent) and San Francisco, CA (52.9 percent). Historical U.S. Home Flipping Financing Trends Chart Typical home flipping returns drop closer to post-Recession low points 2019 Gross Flipping ROI by Price Range Chart Among the 53 markets with a population of 1 million or more, those that saw the smallest gross flipping profits in 2019 included Raleigh, NC ($23,000); San Antonio, TX ($31,756); Phoenix, AZ ($33,641); Las Vegas, NV ($34,300) and Houston, TX ($36,375). In those same markets, the lowest 2019 returns on investment on the typical sales were in Raleigh, NC (10.5 percent); Austin, TX (13.7 percent); Las Vegas, NV (14.7 percent); Phoenix, AZ (15.1 percent) and Dallas, TX (18.7 percent). Average time to flip nationwide is 178 days Percent of flipped homes sold to FHA buyers increases Among the 190 metro areas with a population of at least 200,000 and at least 100 home flips in 2019, those with the highest percentage of 2019 home flips sold to FHA buyers — typically first-time homebuyers — were Stockton, CA (29.9 percent); Merced, CA (27.7 percent); Visalia, CA (27.4 percent); York, PA (27.4 percent) and Lakeland, FL (26.4 percent). Thirty-four counties had a home flipping rate of at least 10 percent Nine zip codes had a home flipping rate of at least 25 percent High-level takeaways from the fourth-quarter 2019 dataset:
Report methodology About ATTOM Data Solutions Media Contact: Data and Report Licensing: View original content to download multimedia:http://www.prnewswire.com/news-releases/us-home-flipping-increases-to-eight-year-high-in-2019-while-returns-drop-to-eight-year-low-301016909.html SOURCE ATTOM Data Solutions |